| ESC A19 - Taxman gets it wrong again - by Bill Stevenson |
| Extra Statutory Concession A19 Don't underestimate how they will defend themselves and you could end up with professional fees plus the original tax bill Phone Bill for help if you want to enter into a client relationship 24/7 mobile - 07751 720 507 |
ESC A19 – We all know about it now ...
or do we? Why did HMRC remove the
Flow Chart from its public manuals -
WAMS Tax Ltd has a copy
The present problems –
HMRC has brought different computers
and databases together on to a new and
improved computer system. Was that
really the one that issued all those
incorrect notices of coding?
As a result loads of underpayments and
overpayments for one or more back tax
years will be dropping through your door
shortly.
Whatever happens when you get a buff (or
nowadays they can also be white just to
throw you off the scent) envelope telling
you that you have overpaid tax or
underpaid tax, DO NOT file it in a drawer
and forget about it.
If the HMRC communication doesn’t show
you the reason for the tax overpaid or
underpaid then write back within 30 days
and say “I cannot agree your figures as I
have not been provided with a narrative
(and quantified) explanation for the
amount shown due to/due by me. Please
provide this detail within the next 21 days
so that I may consider matters and in the
meantime note my provisional appeal
against your notices.”
Remember if they repay you tax
incorrectly they can still come along later
and reclaim it back so repayments and
their basis are just as important as
underpayments.
If you think about it HMRC have got it
badly wrong in the past so why should this
time be any different. Protect your
wellbeing and check it out or get it
checked out so that you can sleep at
nights.
Wait for the further revelations about
back taxes up to six years old and
HMRC having missed the deadlines
ESC A19 –
The text of the extra statutory concession
reads as follows
“A19. Giving up tax where there are
Revenue delays in using information
Arrears of income tax or capital gains tax
may be given up if they result from the
Inland Revenue's failure to make proper
and timely use of information supplied by:
a taxpayer about his or her own
income, gains or personal
circumstances
an employer, where the information
affects a taxpayer's coding; or
the Department for Work and
Pensions, about a taxpayer's State
retirement, disability or widow's
pension.
You could have others so don't give
up just because it's not listed.
Tax will normally be given up only where
the taxpayer:
could reasonably have believed that
his or her tax affairs were in order,
and
was notified of the arrears more than
12 months after the end of the tax
year in which the Inland Revenue
received the information indicating that
more tax was due,
or
was notified of an over-repayment
after the end of the tax year following
the year in which the repayment was
made.
In exceptional circumstances arrears
of tax notified 12 months or less after
the end of the relevant tax year may be
given up if the Revenue failed more than
once to make proper use of the facts they
had been given about one source of
income
or
allowed the arrears to build up over
two whole tax years in succession by
failing to make proper and timely use of
information they had been given.”
BUT remember that ESC A19 is not
limited to PAYE taxpayers it can also
apply to SA and self employed
taxpayers
Consideration of your problem –
Ok so let’s assume that the figures are
correct and you are told that you owe
unpaid tax.
If it’s over £2K you will have to repay it in
one sum by 5th April 2012.
If it’s under £2K then HMRC will
automatically collect the underpayment
(possibly over 12 months starting in April
2011).
What can you do about it?
Well everybody will have heard the media
reference to the ESCA19 loophole. I think
that they use the word loophole to make
their report more intriguing but there is no
loophole. It is what is called an extra
statutory concession. This just means that
while it is not in the taxing statute HMRC
will follow the concession if your
circumstances fit into the required
template.
Tax practitioners will be well aware of the
previous ESC that said that when you were
day counting for residence purposes as
laid out in the then IR20 booklet –
“guidance on residence and domicile
matters-“ you ignored the days of arrival in
and departure from the UK. Remember
how quickly they changed that when Mr
Gaines-Cooper was seen by HMRC to be
exploiting their concession. I wonder if the
Treasury will soon be thinking about
tightening up ESC A19.
Anyway if you read HMRC’s website
you will soon gather that it is not
going to be so easy to get your tax
debt written off by means of the Extra
Statutory Concession A19.
The text of HMRC starts off at http://www.
hmrc.gov.uk/esc/esc.htm
“If you think that HM Revenue & Customs
(HMRC) should have already collected the
tax due in your Tax Calculation (P800)
because the information had already been
provided to it and HMRC have failed or
delayed to use this information, then in
some limited circumstances (my
underlining) HMRC may agree not to
collect it.”
So for a start it is not going to be in
every case where HMRC have failed
or delayed to use information
provided to it that the concession will
be applied.
The words “limited circumstances” show
that you are going to have to jump through
loads of hoops and persevere against the
odds. The taxpayer therefore has to
consider whether the amount at stake is
sufficient to engage the services of the tax
adviser.
Then if he gets over that hurdle he has to
balance the chances of getting the debts
written off; the amount of those debts; the
time that it will take and worst of all the
fees that he is going to have to spend to
get his/her proper justice.
Of course there also can be no
guarantee that what you see as a
justified write off will be accepted by
HMRC. The write off application may not
be successful and he/she might then have
to escalate matters to their MP, or
Adjudicator or Parliamentary Ombudsman.
It always therefore involves time and
stress and worst of all further costs.
Tax doesn't have to be stressful BUT IT
IS - Let Bill help phone 07751 720 507
read on next column>>>>>>
or do we? Why did HMRC remove the
Flow Chart from its public manuals -
WAMS Tax Ltd has a copy
The present problems –
HMRC has brought different computers
and databases together on to a new and
improved computer system. Was that
really the one that issued all those
incorrect notices of coding?
As a result loads of underpayments and
overpayments for one or more back tax
years will be dropping through your door
shortly.
Whatever happens when you get a buff (or
nowadays they can also be white just to
throw you off the scent) envelope telling
you that you have overpaid tax or
underpaid tax, DO NOT file it in a drawer
and forget about it.
If the HMRC communication doesn’t show
you the reason for the tax overpaid or
underpaid then write back within 30 days
and say “I cannot agree your figures as I
have not been provided with a narrative
(and quantified) explanation for the
amount shown due to/due by me. Please
provide this detail within the next 21 days
so that I may consider matters and in the
meantime note my provisional appeal
against your notices.”
Remember if they repay you tax
incorrectly they can still come along later
and reclaim it back so repayments and
their basis are just as important as
underpayments.
If you think about it HMRC have got it
badly wrong in the past so why should this
time be any different. Protect your
wellbeing and check it out or get it
checked out so that you can sleep at
nights.
Wait for the further revelations about
back taxes up to six years old and
HMRC having missed the deadlines
ESC A19 –
The text of the extra statutory concession
reads as follows
“A19. Giving up tax where there are
Revenue delays in using information
Arrears of income tax or capital gains tax
may be given up if they result from the
Inland Revenue's failure to make proper
and timely use of information supplied by:
a taxpayer about his or her own
income, gains or personal
circumstances
an employer, where the information
affects a taxpayer's coding; or
the Department for Work and
Pensions, about a taxpayer's State
retirement, disability or widow's
pension.
You could have others so don't give
up just because it's not listed.
Tax will normally be given up only where
the taxpayer:
could reasonably have believed that
his or her tax affairs were in order,
and
was notified of the arrears more than
12 months after the end of the tax
year in which the Inland Revenue
received the information indicating that
more tax was due,
or
was notified of an over-repayment
after the end of the tax year following
the year in which the repayment was
made.
In exceptional circumstances arrears
of tax notified 12 months or less after
the end of the relevant tax year may be
given up if the Revenue failed more than
once to make proper use of the facts they
had been given about one source of
income
or
allowed the arrears to build up over
two whole tax years in succession by
failing to make proper and timely use of
information they had been given.”
BUT remember that ESC A19 is not
limited to PAYE taxpayers it can also
apply to SA and self employed
taxpayers
Consideration of your problem –
Ok so let’s assume that the figures are
correct and you are told that you owe
unpaid tax.
If it’s over £2K you will have to repay it in
one sum by 5th April 2012.
If it’s under £2K then HMRC will
automatically collect the underpayment
(possibly over 12 months starting in April
2011).
What can you do about it?
Well everybody will have heard the media
reference to the ESCA19 loophole. I think
that they use the word loophole to make
their report more intriguing but there is no
loophole. It is what is called an extra
statutory concession. This just means that
while it is not in the taxing statute HMRC
will follow the concession if your
circumstances fit into the required
template.
Tax practitioners will be well aware of the
previous ESC that said that when you were
day counting for residence purposes as
laid out in the then IR20 booklet –
“guidance on residence and domicile
matters-“ you ignored the days of arrival in
and departure from the UK. Remember
how quickly they changed that when Mr
Gaines-Cooper was seen by HMRC to be
exploiting their concession. I wonder if the
Treasury will soon be thinking about
tightening up ESC A19.
Anyway if you read HMRC’s website
you will soon gather that it is not
going to be so easy to get your tax
debt written off by means of the Extra
Statutory Concession A19.
The text of HMRC starts off at http://www.
hmrc.gov.uk/esc/esc.htm
“If you think that HM Revenue & Customs
(HMRC) should have already collected the
tax due in your Tax Calculation (P800)
because the information had already been
provided to it and HMRC have failed or
delayed to use this information, then in
some limited circumstances (my
underlining) HMRC may agree not to
collect it.”
So for a start it is not going to be in
every case where HMRC have failed
or delayed to use information
provided to it that the concession will
be applied.
The words “limited circumstances” show
that you are going to have to jump through
loads of hoops and persevere against the
odds. The taxpayer therefore has to
consider whether the amount at stake is
sufficient to engage the services of the tax
adviser.
Then if he gets over that hurdle he has to
balance the chances of getting the debts
written off; the amount of those debts; the
time that it will take and worst of all the
fees that he is going to have to spend to
get his/her proper justice.
Of course there also can be no
guarantee that what you see as a
justified write off will be accepted by
HMRC. The write off application may not
be successful and he/she might then have
to escalate matters to their MP, or
Adjudicator or Parliamentary Ombudsman.
It always therefore involves time and
stress and worst of all further costs.
Tax doesn't have to be stressful BUT IT
IS - Let Bill help phone 07751 720 507
read on next column>>>>>>
However once they have overcome all
those uncertainties what needs to be
shown (or should I say proved) as no
doubt HMRC will be giving their troops
handouts or such to help them refute the
“invalid applications”.
Conditions -
1. Time Limits
a. Firstly HMRC have to have failed to
use information provided to them within a
period of 12 months after the end of the
tax year in which the information was
provided.
b. So information provided at any time
up to the 5th April 2009 needs to have not
been properly used by 6th April 2010.
c. Any information provided after 6th
April 2009 can therefore be used by them
at any time up to 5th April 2011 with no
chance of ESC A19 applying.
d. The same time limits apply for any
over-repayment of tax that is made in error
and HMRC asks for the tax to be paid back.
e. See however “Exceptional
Circumstances” below for ESC A19 in
successive years.
2. What sort of information would
need to be supplied?
a. The list below shows information
that HMRC would normally use to adjust
your tax code to make sure you pay the
right amount of tax:
• details of a change in income
• a new job or additional job
• a taxable benefit provided by your
employer, for example a company car
• start receiving a work or private
pension
• receipt of state retirement, disability
or widow’s pension
This list is not exhaustive and each case
will be treated on its own set of
circumstances.
BUT if no information has been supplied
then ESC A19 cannot apply
3. Who should have supplied the
information?
a. This information can come from a
variety of sources
i. you,
ii. your agent,
iii. your employer (if you were an
employee) – But remember ESC A19 can
also apply to SA taxpayers - or
iv. the Department of Work and
Pensions.
b. So clearly you would need to have
proof that
i. the information was either provided
by yourself or
ii. you would have to have knowledge
and evidence that another party provided
the information to HMRC at the appropriate
time
4. Exceptional Circumstances
In exceptional circumstances, arrears
notified less than 12 months after the end
of the relevant tax year may be considered
where both of the following apply:
a. HMRC failed to make proper use of
more than one piece of information
received about a source of income
b. HMRC allowed tax arrears to build
up over two whole tax years in succession
– so at least two tax year underpayments
are due
So that if for example HMRC notify you of
only one year’s unpaid tax at this time it
would be worth considering if the same
situation existed for a later or earlier year
and use this opportunity to bring all unpaid
duties within the ESC.
5. Reasonable belief that your tax
affairs were in order
a. Lastly comes the most difficult
condition namely
i. HMRC will consider the facts and
circumstances of any claim that this
concession should apply and
ii. decide whether it was reasonable for
you to believe (prior to receiving the Tax
Calculation) that your tax affairs were in
order.
b. This therefore shows that an officer
who may have been involved in not making
use of information has to sit down and
admit that they got it wrong.
It therefore requires judgment and an
individual revenue officer will inevitably
have a differing view of what is needed to
show something and also may well not
believe that it was reasonable even though
everybody else does.
As HMRC’s internal guidance instructions
to their staff says:-
“ The important point to remember is
• Not whether the taxpayer
‘believed’ their tax affairs were in
order
But
• Whether it was reasonable for
them to ‘hold the belief’ that they were
It is not the first time that I have seen
HMRC officers interpreting reasonableness
in a different way to other beings and the
instruction requires HMRC staff to make
a judgment twice.
Not only whether the taxpayer truly or
reasonably believed their affairs were in
order BUT also whether it was reasonable
for them to hold that belief. Wow what
scope for taking a hard and questioning
view!!. Look out for the looking at matters
from a completely different perspective.
Now TWO chances to get it wrong again.
6. Making a claim
Finally if after all that you think that you are
entitled to make a claim HMRC’s advice
says :
a. “If you think this concession applies
to you, then you need to telephone HMRC
on 0845 300 0627 indicating that you are
making a claim under ‘ESC A19’.
b. And therein lies the next pitfall –
How often have you tried to get through to
HMRC on the telephone.
c. Granted agents have dedicated
lines however what about the poor taxpayer
who is left to phone the above number that
will inevitably be a call centre operative.
d. However if you do phone remember
and record the name of the person taking
your message and the time of the call.
e. Also make out a short note for
yourself prior to the call of the information
below and during the call - the detail of
your discussion(s)
f. I would recommend putting any claim
in writing and providing the following
information:
• what tax year and underpayment the
claim relates to
• what information HMRC failed to
make proper and timely use of and any
supporting information
• what date this information was
provided
• reason(s) why you thought your tax
affairs were in order prior to receiving the
Tax Calculation
Then of course HMRC will consider your
claim but may need to verify details with
you before giving you a decision.
Watch out for their usual blanket refusal of
your claim without giving any substantive
reasons. Think about making a Data
Protection Act request for all electronic and
other data they hold on you if you want to
continue with your claim in spite of their
unsubstantiated refusal of your claim. This
will let you know if they are hiding anything.
Finally in their guidance they make a
prominent note of
“Please note that there is no legal right of
appeal but you can ask for another officer
to review the decision made.
If you still believe that you should not have
to pay the tax after a second review
decision has been provided, please read
‘How to Complain to HMRC’ to decide if
your case has not been dealt with properly.”
Of course by that time you have come to
the end of the road unless you have the
steel (and monies) to pursue it all the way
to MP’s and/or Adjudicators.
By way of a supplementary aid I would also
say that if you are unsure about the
process and/or any case please feel free to
contact Bill Stevenson on 07751720507
Remember that if you haven't told them
about anything - Income or gains
understated at any time in last 20 years -
watch how you tackle matters.
Unfortunately if you engage a tax adviser to
fight your corner you could end up paying
fees and still have the tax debt. So be very
careful before deciding to engage a
professional.
Bill can assist and explain your options.
Phone on 24-7 mobile 07751 720 507
but remember that proper and recourse
advice cannot be given without engaging
on a proper fee basis and reviewing all the
facts and circumstances.
I know what HMRC get up to so chat
confidentially before deciding what to do
or send me a short message
those uncertainties what needs to be
shown (or should I say proved) as no
doubt HMRC will be giving their troops
handouts or such to help them refute the
“invalid applications”.
Conditions -
1. Time Limits
a. Firstly HMRC have to have failed to
use information provided to them within a
period of 12 months after the end of the
tax year in which the information was
provided.
b. So information provided at any time
up to the 5th April 2009 needs to have not
been properly used by 6th April 2010.
c. Any information provided after 6th
April 2009 can therefore be used by them
at any time up to 5th April 2011 with no
chance of ESC A19 applying.
d. The same time limits apply for any
over-repayment of tax that is made in error
and HMRC asks for the tax to be paid back.
e. See however “Exceptional
Circumstances” below for ESC A19 in
successive years.
2. What sort of information would
need to be supplied?
a. The list below shows information
that HMRC would normally use to adjust
your tax code to make sure you pay the
right amount of tax:
• details of a change in income
• a new job or additional job
• a taxable benefit provided by your
employer, for example a company car
• start receiving a work or private
pension
• receipt of state retirement, disability
or widow’s pension
This list is not exhaustive and each case
will be treated on its own set of
circumstances.
BUT if no information has been supplied
then ESC A19 cannot apply
3. Who should have supplied the
information?
a. This information can come from a
variety of sources
i. you,
ii. your agent,
iii. your employer (if you were an
employee) – But remember ESC A19 can
also apply to SA taxpayers - or
iv. the Department of Work and
Pensions.
b. So clearly you would need to have
proof that
i. the information was either provided
by yourself or
ii. you would have to have knowledge
and evidence that another party provided
the information to HMRC at the appropriate
time
4. Exceptional Circumstances
In exceptional circumstances, arrears
notified less than 12 months after the end
of the relevant tax year may be considered
where both of the following apply:
a. HMRC failed to make proper use of
more than one piece of information
received about a source of income
b. HMRC allowed tax arrears to build
up over two whole tax years in succession
– so at least two tax year underpayments
are due
So that if for example HMRC notify you of
only one year’s unpaid tax at this time it
would be worth considering if the same
situation existed for a later or earlier year
and use this opportunity to bring all unpaid
duties within the ESC.
5. Reasonable belief that your tax
affairs were in order
a. Lastly comes the most difficult
condition namely
i. HMRC will consider the facts and
circumstances of any claim that this
concession should apply and
ii. decide whether it was reasonable for
you to believe (prior to receiving the Tax
Calculation) that your tax affairs were in
order.
b. This therefore shows that an officer
who may have been involved in not making
use of information has to sit down and
admit that they got it wrong.
It therefore requires judgment and an
individual revenue officer will inevitably
have a differing view of what is needed to
show something and also may well not
believe that it was reasonable even though
everybody else does.
As HMRC’s internal guidance instructions
to their staff says:-
“ The important point to remember is
• Not whether the taxpayer
‘believed’ their tax affairs were in
order
But
• Whether it was reasonable for
them to ‘hold the belief’ that they were
It is not the first time that I have seen
HMRC officers interpreting reasonableness
in a different way to other beings and the
instruction requires HMRC staff to make
a judgment twice.
Not only whether the taxpayer truly or
reasonably believed their affairs were in
order BUT also whether it was reasonable
for them to hold that belief. Wow what
scope for taking a hard and questioning
view!!. Look out for the looking at matters
from a completely different perspective.
Now TWO chances to get it wrong again.
6. Making a claim
Finally if after all that you think that you are
entitled to make a claim HMRC’s advice
says :
a. “If you think this concession applies
to you, then you need to telephone HMRC
on 0845 300 0627 indicating that you are
making a claim under ‘ESC A19’.
b. And therein lies the next pitfall –
How often have you tried to get through to
HMRC on the telephone.
c. Granted agents have dedicated
lines however what about the poor taxpayer
who is left to phone the above number that
will inevitably be a call centre operative.
d. However if you do phone remember
and record the name of the person taking
your message and the time of the call.
e. Also make out a short note for
yourself prior to the call of the information
below and during the call - the detail of
your discussion(s)
f. I would recommend putting any claim
in writing and providing the following
information:
• what tax year and underpayment the
claim relates to
• what information HMRC failed to
make proper and timely use of and any
supporting information
• what date this information was
provided
• reason(s) why you thought your tax
affairs were in order prior to receiving the
Tax Calculation
Then of course HMRC will consider your
claim but may need to verify details with
you before giving you a decision.
Watch out for their usual blanket refusal of
your claim without giving any substantive
reasons. Think about making a Data
Protection Act request for all electronic and
other data they hold on you if you want to
continue with your claim in spite of their
unsubstantiated refusal of your claim. This
will let you know if they are hiding anything.
Finally in their guidance they make a
prominent note of
“Please note that there is no legal right of
appeal but you can ask for another officer
to review the decision made.
If you still believe that you should not have
to pay the tax after a second review
decision has been provided, please read
‘How to Complain to HMRC’ to decide if
your case has not been dealt with properly.”
Of course by that time you have come to
the end of the road unless you have the
steel (and monies) to pursue it all the way
to MP’s and/or Adjudicators.
By way of a supplementary aid I would also
say that if you are unsure about the
process and/or any case please feel free to
contact Bill Stevenson on 07751720507
Remember that if you haven't told them
about anything - Income or gains
understated at any time in last 20 years -
watch how you tackle matters.
Unfortunately if you engage a tax adviser to
fight your corner you could end up paying
fees and still have the tax debt. So be very
careful before deciding to engage a
professional.
Bill can assist and explain your options.
Phone on 24-7 mobile 07751 720 507
but remember that proper and recourse
advice cannot be given without engaging
on a proper fee basis and reviewing all the
facts and circumstances.
I know what HMRC get up to so chat
confidentially before deciding what to do
or send me a short message
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| WAMS Tax Ltd |
Remember under £300 per year underpaid means
its own dangers and opportunities that require full and detailed considerations and advice. No responsibility can be taken
the company and Bill Stevenson on a proper fee paying client/tax adviser basis.
The personal views of Bill set out on this page do not constitute tax advice and are presented for enjoyment only by the
reader
WAMS Tax Ltd - Bill Stevenson - 07751 720 507
the company and Bill Stevenson on a proper fee paying client/tax adviser basis.
The personal views of Bill set out on this page do not constitute tax advice and are presented for enjoyment only by the
reader
WAMS Tax Ltd - Bill Stevenson - 07751 720 507